Employees at colleges and universities are more likely than employees in other professions to have taken concrete steps to plan and save for retirement, a TIAA-CREF survey suggests.
In addition to saving in their employer-sponsored retirement plans, 42% of higher education employees have saved in an individual retirement account (IRA), compared to 34% of American employees overall. While 36% of college faculty and staff say they have met with a financial adviser, only 22% of the general population report the same. TIAA-CREF says the actions of higher education employees set a good example for Americans as a whole when it comes to planning and saving for retirement.
The survey also found that higher education employees are less likely to take loans from their retirement plans. Only 16% say they have taken a loan from their plan, compared to 29% of the general population. This employee group also is more likely to keep contributing to their retirement plans at the same rate while paying back their loan—54% say their contribution rate did not change while they repaid their loan, compared to 43% of Americans overall.
What factors have contributed to their retirement preparedness? Nearly three-fourths (73%) of higher education employees say their employers offer a matching incentive for retirement plan contributions. Those who get matches are more likely to get a substantial match from their employer: 43% get a 5% to 8% salary match, compared to 34% of the general population.
Edward Moslander, senior managing director and head of institutional client services for TIAA-CREF, tells PLANSPONSOR that TIAA-CREF has identified four key drivers of successful retirement outcomes that plan sponsors in any industry should keep in mind:
- Designing a plan that builds a strong foundation for retirement readiness, with features such as auto-enrollment and matching incentives;
- Offering low-cost investment options that provide participants with lifetime income;
- Developing an employee engagement plan that focuses on outcomes-based education and advice, delivered through channels that are relevant to employees’ life stages; and
- Taking an approach to plan management that helps mitigate fiduciary risk, drive efficiency and maximize value.
“In the course of nearly 100 years of working with plan sponsors in higher education, we’ve seen the impact of these drivers on employee retirement readiness. In particular, the emphasis on financial education and advice seems to have served higher education professionals well—these professionals are significantly more likely to have met with a financial adviser than Americans as a whole,” Moslander says. “Many 403(b) plans, which higher education professionals are likely to have, also offer low-cost lifetime income options, such as annuities, that provide employees with a stream of retirement income they can’t outlive—an essential part of any retirement savings strategy.”
Despite their exemplary preparations for retirement, higher education professionals are not in a rush to leave the workforce, the survey found. Nearly two-thirds (64%) of higher education faculty and staff plan to retire at age 65 or older. The recent economic downturn doesn’t seem to be a factor in this decision: Nearly the same percentage (63%) of respondents say they had planned to retire at age 65 or older 10 years ago.
Even while retired, many plan to remain active. College and university employees are more likely than Americans overall to say they will work part-time (37% vs. 31%) or do more volunteer work (37% vs. 21%) during retirement.
These findings come from TIAA-CREF’s Higher Education Survey, which was conducted by an independent research firm and polled a random sample of 727 higher education professionals nationwide currently contributing to an employer-sponsored retirement plan. Statistics about the general population of adults come from a TIAA-CREF survey, also conducted by KRC Research, which polled a random sample of 1,000 adults nationwide with an employer-sponsored retirement plan.